July 7, 2017
It finally happened. After over twenty years in business, Amazon is taking its first major foray into brick and mortar locations after acquiring the high-ended grocery retailer, Whole Foods, for $13.7 Billion. Though Amazon has been selling groceries online for some time and experimented with other physical store strategies, it has never taken off in the way Amazon had hoped. Now, Amazon is going to deploy its big data analytics approach to physical grocery retail.
Undoubtedly, much is going to change in the Whole Foods Brand, and at a town hall presentation on June 16th, CEO John Mackey had some exciting things to say about the acquisition.
“It was truly love at first sight, [Amazon] are great people with big hearts and big ideals that wanna make the world a better place and are making the world a better place. They’re the perfect company for us. There’s no better company in the entire world for Whole Foods Market than this company right here. We— we just hit the lottery, gang. This is gonna be so incredibly wonderful.”
— John Mackey, CEO
Whole Foods Market
The New Face of Amazon and Whole Foods
In that town hall meeting, Mackey touched on several changes he expects to see in the Whole Foods Brand after the acquisition. Some of these changes are too general at this time to really pin down what the effect will be, while others are a little clearer.
Mackey conceded that Amazon is a more customer-centric company than Whole Foods citing that Amazon puts the customer first in everything they do and works backwards. What this sentiment will translate to after the dust settles is anyone’s guess. Yet, grocery experts suspect that this will mean lower overall prices. Affordability has been central to Amazon’s success in the ecommerce marketplace, while Whole Foods has a reputation for more expensive, albeit higher quality, items.
During the town hall presentation, Mackey alluded to incorporating Amazon’s technological innovation to the grocery shopping experience. Again, this could be anyone’s guess, but Amazon did unveil a cashierless grocery store in Seattle last year. This was merely an experiment, but if successful, you could see Whole Foods going down a similar trajectory.
Long Term View
Amazon’s business model takes a long term approach to business. Ultimately a low quarter is not a problem if the business is attracting more new customers. Furthermore, this has been crucial to their low cost ecommerce strategy. Mackey implied that Whole Foods will take on a similar stance. Considering the other suggestions of new technology and new customer-focused strategy, the long game may be necessary to weather early shortcomings.
Still Early in the Process
The big takeaway here is that Amazon is bringing their innovative business style and commitment to new technology to an old industry. The final results of this merger is still undecided, but we should all take note. Amazon’s success here is sure to set a new standard in the grocery retail industry and change the way we shop and acquire our food. From big data to little drones, Amazon could once again revolutionize the shopping experience.
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